Ten years ago this week, President Clinton signed the
Telecommunications Act of 1996, completely rewriting the nation's
telecom laws. To mark the anniversary, the Federal Communications
Commission meets this week not in D.C. or some high-tech hub city
but in the smallish Dallas suburb of Keller, Texas.

It's an appropriate location. In September, Keller residents became
the first in the nation to experience a new form of cable TV
competition. That's when Verizon launched its new advanced
television service there. The Verizon offering is now available in
several other cities.

With AT&T and others planning to join the fray, consumers
nationwide could soon enjoy a fierce competition between the former
telephone monopolies and the former cable monopolies. But only if
local regulators don't stop it from happening.

In passing the '96 Telecommunications Act, lawmakers promised
Americans more competition and innovation in telecommunications.
Sure enough, that has come to pass. The rub is that these benefits
have had little to do with the act.

For years, lobbyists and regulators debated and litigated over
provisions in the act meant to jump-start telephone competition by
requiring existing providers to lease their infrastructure to
potential competitors. Though a bonanza for lawyers, these
forced-sharing rules did little for consumers and even hurt
competition by discouraging firms from investing in their own
facilities.

Meanwhile, Internet and wireless technologies - both virtually
ignored by the act - flourished. Despite, or perhaps because of,
this "neglect," these two services have grown beyond all
expectations. These services have also been highly competitive -
not only providing competition in Internet and wireless markets but
also creating competition for traditional wired phone
service.

While this communications revolution is still playing out, another
is beginning for video communications. Digital technologies have
created new ways to deliver cable TV using existing phone lines.
Verizon is using fiber-optic lines to deliver digital video.
AT&T has developed an Internet-based system. Both allow for a
bevy of new features - ranging from expanded video on demand to
caller-ID messages.

The services promise to jolt cable providers with new competition,
if Keller is any guide. Verizon has already earned 20 percent of
the market. And prices have dropped. The incumbent cable provider,
Charter Communications, announced a price cut shortly after
Verizon's launch. A study by Criterion Economics projects that new
entrants could reduce cable rates more than 15 percent nationwide,
saving consumers more than $5 billion per year.

The change involves more than economics, though. Competition may
also give viewers more power to choose their own content.
Responding to concerns by parents and others over what they
consider inappropriate content on cable TV, many policymakers have
called on cable companies to let consumers purchase channels on a
one-at-a-time, or "à la carte," basis. Traditional cable
firms, however, say that today's technology and economics won't
allow this.

The new competitors might change this equation. By its nature,
their digital technology makes individual consumer choice easier,
and the added competition may give all providers an incentive to
offer more choice.

In fact, choice already seems to be part of AT&T's marketing
strategy. As one spokesman explained: "Our goal is to provide more
choices to our customers when they want it, in the way they want
it."

A number of hurdles, however, have to be overcome before all
Americans can enjoy the competition now at play in Keller. Not
least, any new competitor must receive a franchise from local cable
regulators before offering service. There are some 8,000 local
regulators, meaning nationwide service may be delayed for
years.

And many local regulators want to saddle the new competitors with
mandates - ranging from build-out schedules to franchise taxes to
coverage of city council meetings - as a condition of entry. Long
imposed on traditional cable firms, such mandates might have made
sense in the days of monopoly service, but in a competitive
environment they are unnecessary and harmful.

Regulatory barriers should be reduced so that consumers may take
advantage of the new competition. To this end, several states are
considering shifting franchising powers to the state level to
expedite matters. Texas has already done so. Several reform bills
are also pending in Congress. Among them, S. 1504 by Sen. John
Ensign (R-Nev.) would eliminate, and S. 2113 by Sen. Jim DeMint
(R-S.C.) would strictly limit, franchising authority.

Whether because of - or despite - the Telecommunications Act,
American consumers now enjoy the benefits of competition in
telecommunications. But the choice revolution is not over. And,
unless regulators prevent it, cable TV may be the next
battlefield.

James
Gattuso is a research fellow in regulatory policy at
The Heritage Foundation, a Washington-based
public policy research institute.